Blockchain plays a significant role in tracking crude oil

With industry specialists in various strategic positions, the entire process of crude oil trading is almost seamless. Learn how three quarters of Bitcoin Investors Lost money. But a critical factor in these transactions, crude oil, does not have a single universal tracking system.

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With an inherent link to the geopolitics at stake for each country and its suppliers, economic and political consequences come with this lack of transparency. Blockchain has been proposed as a potential solution to improve the supply chain process involving crude oil, with many companies investing in developing and implementing platforms for this purpose. Whether or not blockchain is viable for improvements will determine whether it becomes just a fad or a long-term solution on the global stage. Oil and geopolitics

Crude oil is an industry rooted in the geopolitical realities of the countries and organizations it serves. For example, Saudi Arabia, a key player in OPEC, has for decades enjoyed a strong relationship with most of its partners. On the other hand, Venezuela has faced economic sanctions from the United States for several years due to its political stances. But even Venezuela relies heavily on oil-based financing to support its economy. It must therefore continue to work with some major producers to secure crude oil prices.

Supply chains and oil trade:

Every country that has a stake in global crude oil production deals with these overriding issues. Their domestic supply chains are used to bring oil and other resources to market, and they must continue this practice to keep their economies afloat.

But these domestic supply chains are not the only ones that need to be managed. The global market relies on a constant influx of oil from different countries, and each country also has buyers it needs to work with in order for the oil to reach the international stage.

Any problem within or between these companies or governments can cause or contribute to fluctuations in crude oil prices at all levels of the chain. It creates instability in the global economy and opens up opportunities for those who want or need political influence over other players in the supply chain. However, blockchain can provide a measure of transparency where such power can be more easily achieved.

The impact of blockchain technology on the oil industry

Blockchain can play a significant role in the supply chain process by providing transparency, efficiency and trust among the actors involved. Therefore, it is understandable why companies such as Shell and Royal Dutch Shell would invest in research around blockchain technology to improve their image and fight accusations that they are negligent on climate change.

But blockchain also enables companies to cut costs by processing transactions faster and providing more information about the condition of their shipments. The adoption can also eliminate long paper trails involved in many transactions, which can be a security risk.

Blockchain technology could also allow these companies to operate across borders without relying on intermediaries, which could increase their exposure to various regulations and legal actions. However, progress will eventually provide better insight into all supply chain areas involving energy resources.

Product tracking through blockchain:

One of the most important issues with supply chain data is tracking the product from the point of origin through all stages of the journey. For example, if you buy something from a store, there are many ways you can lose track of it and become unsure of what happened to it.

For example, if you are trying to return a defective item or it doesn’t fit properly, you will need to prove that it was returned. If the owner claims he doesn’t know where it came from, there are no reasonable options other than to assume it’s stolen. Blockchain can make this process more efficient through its ability to help track products throughout their lifecycle while providing a high level of security.

Blockchain for Transparency in Oilfield Assets:

The transparency that blockchain brings can lead to a more significant number of points in the supply chain where there can be clear insight into the condition of the assets used to get your oil from point A to point B. With more visibility into the history of certain assets, you can make better decisions about what you can do with them as a consumer and even as a producer. You will also be able to see where certain products come from and decide if it is right for you or your customers.

Commodity trading in real time:

Trading in the commodity market is a complicated process involving many intermediaries. The current system is ineffective in properly managing supply, demand or pricing. It creates problems for all parties and makes it difficult for investors to get the most out of their money.

Much analysis and research has been done on blockchain as a possible solution to this problem, but so far there has been very little actual use by the public. However, some of the major players in the industry are already starting to use blockchain technology to track their stocks, and it is an area that deserves more attention to fully understand its potential.